Obamacare

Today the U.S. Supreme Court issued its ruling in King v. Burwell (PDF download). The case addresses Obamacare tax credits for lower-income Americans enrolled through the federal healthcare exchange. The formal name of the law is the Patient Protection and Affordable Care Act (PPACA) but it is also known as the Affordable Care Act (ACA) and Obamacare. In his dissent, Justice Antonin Scalia coined a new name for the healthcare law – SCOTUScare. Apparently Justice Scalia feels this ruling and their National Federation of Independent Business v. Sebelius (PDF download) ruling give the Supreme Court at least partial ownership of the law. As an aside, notice the word “scare” is the last part of SCOTUScare, intentional?

Justice Scalia asks how one can read “an Exchange established by the State” to mean “an Exchange established by the State or the Federal government”? When did the federal government become a state? The majority finds that the term “by the state” is ambiguous when read in the context of the entire act. The majority says Congress must have meant the credit to apply to all eligible individuals regardless of the type of exchange. Otherwise, lower income taxpayers in states without a state exchange typically could not afford coverage.

An inability to afford health insurance is one exception to the penalty tax. If the premium for minimum coverage exceeds 8% of the taxpayers’ income then they do not owe the penalty tax. Essentially, this is the argument made by the petitioners. They live in Virginia which does not have a state exchange. The petitioners do not want health insurance. Without the credit, they will not owe the penalty as their premiums will exceed 8% of their income.

Interestingly, the petitioners argue Congress thought making the credits only for state exchanges was enough of an incentive for all states to create exchanges. The Supreme Court majority dismisses this argument on the assumption that Congress would not have added the federal exchange if they felt all states would create their own exchange. A bit of twisted logic. Perhaps Congress intended the lack of a credit for state citizens without a state exchange would motivate the electorate to force their state to create an exchange.

A simple amendment by Congress could have fixed this issue by deleting “by the State” from the credit provision or rewriting it to say “by the State or the federal government.” Of course the last few Congresses would rather argue than do the people’s work. If the healthcare law’s opponents have a better way to improve healthcare, then they should introduce a bill. If nothing else, the law’s opponents could have ratified the credits for 2014 through 2016 to give exchange customers the credits they thought they were due and time to figure out a more permanent fix.

Other interesting comments in the case and dissent:

“The Affordable Care Act contains more than a few examples of inartful drafting.” Comment: No kidding but that seems to be the situation with many Congressional laws of any substance. For example, Justice Scalia writes “Laws often include unusual or mismatched provisions.”

“… the Act does not reflect the type of care and deliberation that one might expect of such significant legislation.”

“The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral.” Comment: Is it really the court’s job to fix stupid laws? Congress should have to fix its own messes.

Justice Scalia writes that the majority uses “interpretive jiggery-pokery.” Comment: Not really sure I know what that means but it does not sound good.

Again from Justice Scalia – “[t]his Court, however, has no free-floating power ‘to rescue Congress from its drafting errors.’ Lamie v. United States Trustee, 540 U. S. 526, 542 (2004).” Comment: He is saying Congress should fix or not fix the problem. It is not up to the courts to fix the law, only to interpret and rule on its constitutionality.

The SBA, in conjunction with the Small Business Majority, is offering free webinars on the Affordable Care Act (aka Obamacare) each Thursday at 2:00 PM ET through February 27, 2014.

While most people know that only businesses with more than 50 employers are required to offer qualifying health insurance, what most people do not realize is that if their business voluntarily offers health insurance then that insurance is required to meet the Affordable Care Act’s (ACA) rules.

The links to register for the webinars are on the SBA’s Health Care page. You will also find links to other information on the ACA on the same page.